How the 0–100 REDealIQ Score is computed, what drives it, and how sensitivity grids work. We believe in transparent methodology — here's exactly how our model thinks.
~800-word read · Updated May 2025
Every deal underwritten in REDealIQ receives a score from 0 to 100. The score is not a prediction — it's a disciplined summary of how a deal performs across the metrics that matter most to institutional investors, normalized to a common scale. A score of 75+ signals the deal clears institutional thresholds on most dimensions. A score below 50 means the deal needs restructuring before it makes sense at current terms.
The score is computed from a weighted combination of six factors. Weights differ slightly between commercial and residential modes to reflect the different risk drivers in each asset class.
| Component | CRE weight | Residential weight | Rationale |
|---|---|---|---|
| DSCR quality | 30% | 20% | Primary lender covenant; break here = financial distress |
| IRR (hold-period) | 25% | 25% | Comprehensive return; captures growth, reversion, leverage |
| Cash-on-cash yield | 20% | 25% | Income quality in the early years; critical for cash flow investors |
| Going-in cap rate vs. market | 15% | — | Pricing discipline relative to local cap rate environment |
| Equity multiple | 10% | 15% | Absolute return sanity check |
| BRRRR efficiency / 70% rule | — | 15% | Residential-specific: capital recycling and margin of safety |
Each component is scored 0–100 against pre-defined benchmark curves. For example, DSCR is scored as follows:
The component scores are combined using the weights above, then capped at 100. There are two hard floors: a deal scoring below 30 on DSCR is capped at 50 overall (a fundamentally broken capital structure cannot be rescued by strong IRR assumptions), and a deal where the IRR is negative is capped at 25 regardless of other components.
| Score range | Rating | What it means |
|---|---|---|
| 75–100 | Strong | Clears institutional thresholds across most dimensions; move quickly |
| 60–74 | Solid | Good deal at current terms; minor improvements would make it institutional |
| 45–59 | Marginal | Needs price reduction, rate improvement, or operational upside to pencil |
| 0–44 | Weak | Does not work at current assumptions; re-trade or pass |
The sensitivity grid runs a two-dimensional sweep across any two input variables simultaneously. For each combination of values, the model computes the full deal (including IRR, DSCR, cash flows, and exit value) and returns the selected output metric for that cell.
By default, the grid sweeps the X-axis across exit cap rates and the Y-axis across rent growth rates, reporting IRR — because these two variables have the largest impact on hold-period returns and are also the hardest to forecast. The result is a matrix that visually shows exactly where the deal breaks.
Color coding follows a traffic-light convention aligned to the score thresholds: green cells (IRR ≥ 12%) represent strong outcomes, yellow cells (8–12%) represent acceptable outcomes, and red cells (below 8%) represent scenarios where the deal likely doesn't meet return hurdles.
The Scenarios tab computes three discrete outcomes by applying assumption deltas to the base case. Default deltas reflect a moderate stress test — bear case applies +1.5pts vacancy, −1.5pts rent growth, +0.5pts expense growth, and +0.75pts exit cap; bull case inverts these. Users can override every delta individually to model their own conviction.
The narrative below the cards automatically flags two critical conditions: (1) a bear-case DSCR below 1.0x, which indicates the deal cannot withstand a downturn without restructuring, and (2) a bull-case score below 75, which suggests the upside isn't strong enough to justify the risk even in the optimistic scenario.
The REDealIQ Score is a tool, not a verdict. It cannot account for property-specific factors not reflected in the inputs: deferred maintenance, tenant credit quality, local regulatory risk, or the operator's ability to execute. It should be used as a first-pass filter and a communication tool — not as a substitute for full due diligence. See our Terms of Service for the full disclaimer.
Plug in any deal and watch the score, sensitivity grid, and scenarios compute in real time. Free, no signup required.
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